VZCZCXRO8752
PP RUEHBI RUEHCI
DE RUEHCI #0117/01 1011415
ZNR UUUUU ZZH
P R 101415Z APR 08
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC PRIORITY 1957
INFO RUEHNE/AMEMBASSY NEW DELHI 1836
RUEHBI/AMCONSUL MUMBAI 0852
RUEHCG/AMCONSUL CHENNAI 0847
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEIDN/DNI WASHINGTON DC
RHMFIUU/CDR USPACOM HONOLULU HI
RUEHCI/AMCONSUL KOLKATA 2391

UNCLAS SECTION 01 OF 02 KOLKATA 000117 
 
SIPDIS 
 
SIPDIS 
 
DEPT PLS PASS USTR-AADLER 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EINV PGOV EFIN IN
SUBJECT: IN WEST BENGAL, LAND ACQUISITION FOR INDUSTRY (SLOWLY) 
MARCHES ON 
 
REF: 07 KOLKATA 41, 07 KOLKATA 380 
 
¶1.  (U) Summary: As the Government of West Bengal (GOWB) 
continues its efforts to attract investment and industry into 
the state, the debate over how and where to acquire land 
continues in the run-up to May's panchayat (local) elections. 
The Communist Party of India-Marxist (CPM)-led Left Front 
coalition has faced internal friction over the CPM's interest in 
further industrialization and the its efforts to speed land 
acquisition in the past have met with protests and violence in 
the cases of Singur and Nandigram (reftels).  Despite these 
controversies, the GOWB continues to facilitate land 
acquisition, albeit in a more tempered manner.  From March 7 to 
March 18 Econoff met with an official who oversees these 
projects and spoke to researchers who are following the land 
acquisition issue in the state and confirmed that acquisition of 
agricultural land and further industrial development remain top 
GOWB priorities.  End Summary. 
 
¶2.  (U) In West Bengal 72 percent of the population depend on 
the agricultural sector and farming for their livelihoods. 
Almost all of West Bengal's land is cultivable and landowners 
hold less than 1.6 acres of land on average, according to 
research performed by international consulting firm KPMG. 
Partly due to this emphasis on agriculture, other sectors of 
West Bengal's economy have faltered or remained fallow in the 
past. The state ranks tenth nationally in per capita income, 
with only 5.8 percent of the total number of factories in India. 
Its manufacturing sector currently makes up just 11 percent to 
the state's NDP, according to the KPMG report.  Compelled by 
these statistics, the West Bengal government is working to 
attract industry projects that can infuse its economy with 
capital and diversify career opportunities for its residents. 
 
Efforts to Address Problems with Land Acquisition 
-------------- 
 
¶3.  (U) According to Economics Professor Abhirup Sarker, who has 
researched land acquisition issues in West Bengal extensively, 
the GOWB's haste to attract business triggered a backlash from 
farmers who were disadvantaged by the prices they received for 
land acquired by the state.  For example, in Singur land was 
purchased at prices that did not account for the "shadow value" 
a farmer's labor contributes to the worth of land, or to the 
future accrual of the property's value once a factory was 
constructed on it. In Singur, according to Sarkar, prices in the 
immediate area have risen from Rs 1.2 million (USD 30,000) per 
acre paid two years ago at acquisition to Rs 5 million (USD 
125,000) per acre today. 
 
¶4.  (U) Farmer's feelings of having gotten a raw deal have 
spurred some re-thinking in the GOWB.  The GOWB recently 
introduced new measures that Executive Director of West Bengal 
Industrial Development Corporation (WBIDC), Nandina Chakravorty, 
says is aimed at ensuring corporate responsibility and providing 
adequate rehabilitation and compensation to family's displaced 
by land acquisition.  She described this approach as an effort 
to address the "multiple socio-economic dimensions associated 
with land expropriation." The WBIDC is the GOWB's nodal agency 
for rehabilitation and recently began using socio-economic 
surveys to identify and track the needs of family's in areas 
identified for industrial development and land acquisition. 
These surveys provide census data and assessments of the 
infrastructure and social needs of communities in areas 
scheduled for land acquisition. 
 
¶5.  (U) According to Chakravorty, this data is used to fashion 
rehabilitation packages, which might include stipulations for 
employment, training, or education of displaced families. 
Chakravorty said that implementation of these packages is 
required before the WBIDC, which acts as an intermediary when 
land is acquired for industry, releases the property to the 
companies involved in the industrialization project.  She said 
that current rehabilitation packages include stipulations for 
establishing English language schools, in addition to payment 
packages for land acquired. 
 
Attitudes Towards Land Acquisition in an Affected Area 
-------------- 
 
¶6.   (U) The GOWB recently tapped Professor Santanu Roy to 
perform one of these surveys among the landholders in Singur. 
 
KOLKATA 00000117  002 OF 002 
 
 
Roy spoke with Econoff and said that according to his findings, 
less than half of the landholders in Singur resent the GOWB 
efforts to acquire their land.  Those who do, said Roy, resent 
the expropriation efforts because their psychological and 
cultural ties to farming outweigh the fiscal rewards of selling 
their land.  In Dr. Roy's opinion, this section of the populous 
provides fodder for the opposition parties' political rhetoric 
as they try to leverage the concerns of traditional farmers in 
order to gain broader public attention and undermine the GOWB's 
policies. 
 
¶7.  (U) Conversely, according to Roy, about 75 percent of the 
landowners were open to the financial gains made through selling 
their land.  This group, according to Roy, was able to take the 
money they received for their land and deposit it in interest 
yielding bank accounts, which are transacted through national 
banks established in the area.  He also said the families have 
used their profits to pursue entrepreneurial ventures in sectors 
outside of agriculture.  Roy's research has shown that a 
majority of landholders are interested in moving into new 
economic sectors and GOWB Commerce and Industry Minister Nirupam 
Sen has cited the West Bengal electorate's demand for 
industrialization as a talking point to support land 
acquisition, according to Sarkar. 
 
 
You Can't Stop Progress 
-------------- 
¶8.   (U) According to WBIDC Executive Director Chakravarty, 
controversies over projects like Singur overall have not been 
detrimental to potential projects in the state.  Within the last 
two years, according to Chakravarty, interest in industrial 
projects and the associated requisition of land have experienced 
exponential growth and she does not anticipate any slow down in 
the future.  According to her office's data, the WBIDC will be 
working to realize and complete their current portfolio of 
industrialization projects and land acquisition is expected to 
continue through this term as well. 
 
¶9.  (U) Private and public investors committed USD 2.5 billion 
to West Bengal in 2006-07.  The state needs 90,000 acres to 
accommodate these proposals, which is 0.6 percent of the total 
agricultural land (14 million acres) available.  The KPMG report 
on West Bengal's sustainable development says that the loss of 
less than one percent of agricultural land will make no 
difference to the state's food security provided issues like 
investment in irrigation, adopting high yielding crop varieties, 
and market distortions are resolved. 
 
¶10.  (U) While the Tata Motor plant on 1,000 acres in Singur is 
nearing completion, the 10 million ton USD 8.7 billion steel 
plant by JSW Bengal Steel in Salboni is also likely to bear 
fruit.  The plant will be built on 5,000 acres of land, of which 
4,500 acres have already been acquired.  In addition, Caparo 
Engineering India, a subsidiary of the U.K.-based Caparo Group, 
is setting up a sheet metal and stamping facility at Singur. 
The state government is also planning two new IT-specific 
special economic zones (SEZs) to accommodate IT giants Infosys, 
Wipro, and TCS.  These SEZs will be located in Rajarhat (323 
acres) and Kalyani (200 acres). 
 
¶11.   (U) Comment: The ongoing issue for the CPM is how to 
please both its traditionalist allies as well as those pushing 
for changes in the structure of West Bengal's economy.  Left 
Front partners like All India Forward Bloc (AIFB) and the 
Revolutionary Socialist Party (RSP) remain a thorn in the side 
of the coalition's efforts at economic development, and further 
criticism and threats to industrialization efforts can be 
expected as local elections approach.   The AIFB and RSP control 
West Bengal's Ministries of Agriculture and Public Works, 
respectively, which have provided both parties ample 
opportunities from which to expound anti-industrialization 
platforms in order to protect the farmers and special interest 
groups associated with the two portfolios.  This helps account 
for the "slow" pace of industrialization that GOWB CM 
Bhattacharjee often mentions.   However, Consulate 
interlocutors, including Chakravorty, the researchers, and 
businessmen with whom we spoke, emphasized that the CPM is 
committed to the process of industrial development and that it 
is unlikely to be derailed by political opponents either from 
within or without in the long term. 
SURAMPUDI